By Jay Fox
Brooklyn, NY, USA

The second day of the Benzinga Cannabis Conference in Toronto is running behind schedule before it even begins. A recent initiate to the cannabis world may think that this is to be expected. After all, stoners are not known for their punctuality or their business acumen, and many probably assume that the people in attendance at the conference revile structure and perceive business casual as a pair of four-letter words. For many reading this, the very words “cannabis conference” probably elicits imagery from Woodstock or a Bob Marley concert.

This is misconception. The cannabis industry, as of today, is a rapidly evolving, global network of growers, distributors, operators, and brands overseeing a sophisticated 
Jay Fox

network of supply chains that have to comply with a seemingly endless number of arbitrary and capricious local, state, and federal laws that are subject to almost daily amendments. Despite these difficulties, entrepreneurs know that demand for cannabis is only going to continue growing for the foreseeable future. This means that there are millions, if not billions, of dollars to be made.

Therefore, it is no surprise that there is no tie-dye, few dreadlocks, and no wafting scent of burning herb in the air. Instead, the crowd is comprised mostly of stoic investors, financial analysts talking about the recent merger between Canopy and Acreage, news junkies staring at their phones and waiting for the Mueller report to be released, and people too hungover to do much more than trade platitudes and concentrate on the day’s third or fourth cup of coffee. In other words, it does not look much different than any other type of conference with the exception that the average age of the crowd is probably ten years younger than just about any other industry.

As is the case with any youthful endeavor, there is a sense of enthusiasm permeating throughout the cannabis space, even if it is lacking at the moment. After all, it is just after nine in the morning and many of those in attendance are from the West Coast and still trying to acclimate themselves to the time change.

As the cue that the day’s events are about to begin sounds, the din of conversation fades into a stream of whispers. The doors to the vestibule close. All eyes turn to the stage.

Enter Jason Raznick.

As the CEO of Benzinga, a financial information services and media company based in Detroit, Raznick has positioned himself to be a major spokesman for the numerous potentially lucrative opportunities that cannabis can offer investors, and the packed conference shows that his bet has more than paid off. However, it’s not the number of attendees or the valuations of the companies at the conference that he’s interested in. Rather, it’s the idea of connecting. He stresses the importance of meeting new people, of exchanging business cards and pleasantries between presentations or over drinks during cocktail hours that stretch from late afternoon until well past dusk. For him, the point of coming to something like the Benzinga conference is “putting yourself in an uncomfortable situation.” It’s a wildly optimistic vision about the power of synergy, entrepreneurialism, and capitalism that most of the people in the crowd, as well as people throughout the cannabis space in general, tend to share.

There is an idea that those who have chosen to be part of the industry are pioneers. In many ways they are. As cannabis prohibition begins to collapse around the world, what is left is not unlike the Zone from Pynchon’s Gravity’s Rainbow. It is a free space where anything can happen, where opportunities are almost unlimited, where superstructures do not yet exist. A massive, legitimate industry needs to be created to supplant what has heretofore been a piecemeal and illegal network of markets furtively operating across multiple states and countries. While there is no doubt that it will require massive amounts of capital, it will also need innovation and the participation of dozens of adjacent industries that will each potentially take a cut from whatever riches happens to emerge.

From a medical perspective, the ending of prohibition will make it easier to conduct research on cannabis and cannabinoids—compounds that appear to be unique to cannabis and that hold the most promise for medical applications out of all the substances found in the plant. Not only does this mean more research on familiar compounds like cannabidiol (CBD) and the primary intoxicant found in cannabis, Δ-9-tetrahydracannbinol (THC), but the chance to explore the long list of naturally-occurring—though somewhat obscure—chemicals found within cannabis to see if they, too, have potential medicinal uses.

Studies are finding that there may be some truth to one of the many slang terms given to cannabis by Sanskrit speakers from long ago: sarvarogaghni. The term, which translates into “that which cures all diseases,” is not just a bit of ancient stoner humor. Physicians from the Ayurveda tradition used cannabis as an antibacterial, anticonvulsive, anti-inflammatory, antimalarial, and antivenin, just to name a few. It was typically eaten, though, as a means to treat diarrhea, the smoke of ganja was sometimes blown directly into the rectum. It was also used as an obstetric aid. Muslim doctors of the Unani-Tibb tradition used it in much the same way. Western doctors at the turn of the century, meanwhile, thought it could help with bronchitis, pulmonary tuberculosis, delirium tremens, various types of neuralgia, eczema, and even gonorrhea.

Currently, research suggests that cannabinoids can treat autoimmune disorders like Crohn’s disease, cystitis, and rheumatoid arthritis; that it can help cancer patients and others who are suffering from wasting diseases like AIDS; and that it can reduce the frequency of seizures in children with Dravet syndrome. CBD, meanwhile, is being touted as a way to accelerate the recovery from workouts and minor injuries, ease the symptoms of generalized anxiety disorder, and (more vaguely) promote the wellbeing of both humans and their pets. Yes, there are now lines of CBD products specially designed for dogs, cats, and even birds.

There is a tech component, as well. Researchers are focusing on designing delivery mechanisms that can improve how the cannabis-based medicines target specific ailments or areas of the body. Software wizards are also hoping to use their expertise to design programs that can monitor and standardize how the plant is grown, improve efficiencies within supply chains, reveal trends in consumption patterns on a highly localized scale, and offer insights to consumers about what type of high each of the thousands of strains of cannabis will provide.

Engineers, meanwhile, are hoping to design and patent new ways that extract cannabinoid oils from the plant material using chemicals like carbon dioxide, ethanol, or butane. Depending on the technique, the resultant oil may contain only specific cannabinoids or it may contain all the cannabinoids, terpenes, and flavonoids of an individual strain. Consumers can then buy a cartridge and enjoy the signature taste and aroma of their favorite kind of weed using a vape pen or through another means.

These engineers are also designing new and improved vaporizers, too. The same technology that has made nicotine cool again cannot be applied to cannabis because nicotine is water soluble, while cannabinoids are fat soluble. There are also those who hope to use nanotechnology to make cannabinoids water soluble, not only because it will allow them to use the same vaporizers designed to deliver nicotine, but also because it will mean that they can subsequently design beverages to be consumed in the same fashion as one drinks a beer. This, of course, will also require technology that accelerates how quickly the cannabinoids are absorbed through the digestive tract so those who consume such products can avoid a harshing of the mellow.

The list of potentially revolutionary pieces of intellectual property and patents goes on for days, as even a minor innovation can be worth millions if it becomes an industry-wide standard. Consequently, any company that claims to be on the verge of something big sees their valuation launch into the stratosphere overnight, and, no surprise, even true believes in the industry regularly make comparisons to the dot-com years. This is not as disparaging as it may first seem. Although the internet boom of the 1990s did create a bubble, it also revolutionized the way we live and completely transformed the world economy. It was the era that gave us and MapQuest, but also introduced us to Amazon, Priceline, MP3s, and the double-edged swords of virtual anonymity and free information.

Suffice to say, those in attendance at the conference know that they are on the ground floor of something massive. As Joel Milton, the Senior Vice President of TILT, would later tell an audience during his company’s presentation: The legal cannabis industry in the United States was worth about $10 billion in 2018. Within the next few years, it is expected to reach $100 billion—about $14 billion short of the current US beer market. In other words, $90 billion in potential investment opportunities have yet to appear in an industry that does not have a Budweiser or a MillerCoors or any other corporate behemoth positioned well enough to gobble up the majority of the wealth that is about to be created. Instead, it will mostly come from and be absorbed by smaller companies that may not even exist yet. If an astute enough investor can back the right horse or team of horses, everyone in attendance understands, the returns could be astronomical.

“Sit with someone you don’t know,” Raznick says. “Seriously, party rule. This is the place where you meet people, network, and figure out how you’re going to build the next billion-dollar business or invest in that and get your 10x or 100x.”

We sit in the Concert Hall of the Fairmont Royal York, a veritable city within a city across the street from Toronto’s primary rail station. On the other side of the door and just a few yards away is a 5,000-square-foot ballroom that seems to have been modeled on one of the more grandiose parts of the Winter Palace. In that ornate room, the sights and the conversations you overhear assure you that Raznick is not exaggerating when he suggests that investors stand to make ten or one hundred times their initial investment in the cannabis space. At small tables that can comfortably only seat four or five, clusters of investors, entrepreneurs, retailers, and owners of companies that specialize in everything from accounting software to security are hammering out the details of six-, seven-, and eight-figure deals.

As licenses to grow, process, or sell cannabis are oftentimes attached to properties rather than just compliant companies, having a plot of land and a certificate to operate can mean big bucks even if you don’t have anything else on the land—or the means to get a loan to build anything there. Consequently, investors play a major role in getting these operations off the ground or, more cynically, of making sure nothing ever takes off—i.e. buying out the competition. Perhaps more importantly, these investors also know they have to act quickly when they see something that interests them because someone else inevitably will. In some cases, it seems as though the checkbooks are already out before last names have been exchanged.

The opportunities are not limited to the US and Canada alone. Colombia, for example, allows for the cultivation of medical-grade cannabis, though the actual plant can’t be exported out of the country until it has been processed and converted into oil (nor can any cannabis be legally imported into the US at this time). In fact, one of the main themes that was explored during the first day of the conference was the bifurcation of the Canadian industry into craft weed and bulk weed. The former will be grown at a premium in Canada and sold as flower or in the form of strain-specific oil to connoisseurs who mostly use cannabis recreationally. The latter can be grown for next to nothing in places like Colombia, converted into concentrate, and sold as a commodity without as much care or attention paid to maintaining the aromatics and tastes of a specific strain. It will then be sold to pharmaceutical companies as a raw material (see below) or turned into a white label product to be repackaged by brands that sell premium experiences or the luxury lifestyle to gullible people in their twenties, even if what they are actually selling is a commodity that is grown at a cost of somewhere between a nickel and a dime per gram (according to a representative from the Canadian company Avicanna).

The amount of money that changed hands over the course of the two-day event is almost unfathomable to a person who does not deal in international finance or for whom the typical investment vehicle appreciates at a glacial 5% or 6% per annum. Even though many of the largest investors in the world—whether they are venture capitalists, hedge funds, or banks—continue to sit on the sidelines as the states attempts to unravel the Gordian knot of federal regulations currently choking the industry, there are still major players and family offices who are eager to accept the potential risks involved with cannabis. In fact, I would not be surprised if more than one billion dollars changed hands over the course of the two days at Benzinga just in that palatial ballroom alone. Another billion or two probably changed hands over steak dinners, at high-end strip clubs, or in hip cocktail lounges in Little Portugal.

Therefore, it would be foolish to dispute the frequent refrain from the conference, which is that cannabis is an investment opportunity that only comes along once in a generation. However, if you look past the optimism and the sense of camaraderie among the believers, one also gets the sense that even the adults in the room have no idea what’s going on, that the industry is woefully underregulated, that the current valuations of most of these companies are quite literally insane, and that there are hordes of sketchy entrepreneurs licking their chops and hoping to get in and out with their pockets full before the bubble pops.

Honest people do not always answer the door when opportunity knocks.

Cannabis, Hemp, and Marijuana

For someone who is new to the industry, it might seem as though the decision to begin calling weed “cannabis” is a branding sleight of hand or yet another battle site in the ongoing culture wars that have dragged on for more than half a century. It is neither. Simply put, cannabis is a generic term for all plants within the Cannabis genus. That’s it.

Within this genus, some argue that there are at least two species, C. sativa and C. indica. Others argue (ostensibly correctly) that there is only one species, C. sativa, and that all other variants qualify as lower orders of distinction: subspecies, variations, or forms. No matter where one falls in the approximately 250-year-old debate over the proper classification of the plant, however, there are only two broad branches of cannabis grown in the US as defined by the 2018 Farm Bill.

The first is called hemp. For a plant to fall under this category, no part (“including the seeds thereof and all derivates, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not”) can have a concentration of more than 0.3% THC. If a part of the plant produces more than 0.3% THC, then it is known as marijuana. Marijuana continues to be illegal at the federal level for both recreational and medicinal purposes with three exceptions.

On top of providing a definitive line in the figurative sand to differentiate between hemp and marijuana, the 2018 Farm Bill made it legal for farmers to grow industrial hemp for either research or commercial purposes. It also allows the transfer of hemp and hemp-derived products across state lines. It continues to be illegal to transfer marijuana or marijuana-derived products across lines, and the sole site from where researchers can obtain samples of marijuana is a facility on the campus of the University of Mississippi. The Ole Miss facility also sends out cannisters of joints to eligible patients under the Compassionate Investigational New Drug Program. (Actually, they send the raw product to a facility in North Carolina, where the joints are then rolled because, you know, efficiency.) Though it was discontinued in the early 1990s, the surviving patients who were grandfathered into the program continue to get their medicine: Elvy Musikka, who has glaucoma; George McMahon, who has nail-patella syndrome; and Irving Rosenfeld, who has multiple congenital cartilaginous exostoses. They are the three exceptions to the federal ban, and they still receive cannisters containing 300 pre-rolled joints every month.

Until the passage of the 2014 Farm Bill, hemp was as tightly regulated as marijuana. Following the 2014 bill, however, small pilot programs to study hemp were allowed by the federal government, but even these were highly regulated. A 2018 internal directive from the US Drug Enforcement Agency clarifying 2016’s joint Statement of Principles of Industrial Hemp was issued by the DEA, the United States Department of Agriculture, and the Food and Drug Administration, even sterilized seeds were subject to the Controlled Substances Act (the “CSA”), which was signed into law by former President Richard Nixon in 1970.

Hence the reason why the 2018 Farm Bill was such a big deal for the cannabis industry. However, it does not address what many see as the ultimate hypocrisy of the federal government’s attitude toward what is now defined as marijuana, and this goes back to the CSA. What the CSA did was create five schedules of drugs (controlled substances). Schedule I drugs are not considered to be more dangerous than other scheduled drugs; rather, they are considered to have “no currently accepted medical use” and a high potential for abuse. Schedule II substances, meanwhile, are also said to have a high potential for abuse, but do possess some potential medicinal uses. Schedule III have “a moderate to low potential for physical and psychological dependence,” as well as accepted medical uses. Schedule IV and Schedule V drugs also have medical uses and are considered to have an even lower potential for abuse or dependence than Schedule II and Schedule III drugs.

Furthermore, the lower the Schedule number, the more difficult it is for researchers to obtain a sample to run studies, meaning that Schedule II drugs are less restricted than Schedule I drugs. Some Schedule II drugs include Dexedrine, Adderall, and OxyContin. Schedule II is also home to cocaine, methamphetamine, and fentanyl—a drug that is up to 50 or 100 times more potent than heroin and one of the primary culprits behind not just the opioid crisis, but, more tragically, the recent spike in overdose deaths throughout the country.

In other words, researchers have an easier time obtaining government-approved meth, cocaine, and fentanyl than they do research-grade weed from Ole Miss. To apply for a study that involves cannabis from the Mississippi facility, researchers must get approval from the FDA, the DEA, a Public Health Service panel, and the National Institute on Drug Abuse—an organization that seems reluctant to give up the narrative that cannabis is a “gateway drug.” No other drug is regulated in this manner, and the circular logic that follows as a result was best summed up in Alyson Martin and Nushin Rashidian’s book, A New Leaf, as follows: “Cannabis is Schedule I because there is not enough federally approved research, but there is not enough federally approved research because cannabis is Schedule I.”

Meanwhile, there are three patients who continue to get their 300 joints every month containing a drug that has “no currently accepted medical use” value courtesy of Uncle Sam, as has been the case for more than 27 years.

The Science of the Plant

On top of THC content, hemp and marijuana have other significant differences. Plants that are characterized as hemp (often referred to as fiber-type plants) tend to be less bushy and taller than marijuana plants (often referred to as drug-type plants). Their stalks also tend to produce fibers that are of a higher quality than marijuana plants, and this fiber has a wide variety of industrial purposes. Hemp can be made into a sustainable building material known as Hempcrete, rope, cloth, and paper. Not only were some of the first Guttenberg Bibles printed on hemp paper; the very invention of paper itself (credited to a eunuch named Ts’ai Lun in 105 CE, though there is evidence that less durable forms of paper were being used prior to this) involved the use of hemp. Looking back even further, one finds that humans have been using the fibers of wild hemp to create cordage prior to the Neolithic Revolution. In fact, it may have been one of the first non-food crops to be cultivated.

Hemp typically generates very low amounts of THC and high concentrations of CBD. Marijuana generates higher amounts of THC and concentrations of CBD that are significantly lower than hemp. Here’s what’s really amazing, though: This is not solely due to artificial selection by humans. Instead, a naturally occurring genetic variation that took place hundreds of thousands, if not millions of years ago, altered the way in which plants biosynthesized the first cannabinoid that the plant produces. It is known as cannabigerolic acid (CBGA). In hemp plants, the CBGA is primarily biosynthesized into cannabidiolic acid (CBDA), the direct precursor to CBD. In marijuana plants, the GBGA is primarily biosynthesized into tetrahydrocannabinolic acid (THCA), the direct precursor to THC. (Some plants also create homologues to CBDA and THCA, but this separate class of propyl cannabinoids need not concern us right now.) The variety of cannabis that peoples in ancient Europe and northern China found growing wild was fiber-type. The variety that ancient peoples in Central Asia discovered was drug-type.

CBDA and THCA, which become CBD and THC, respectively, when introduced to heat through a process called decarboxylation, are the two most prevalent cannabinoids found in mature cannabis. They are not the only ones. Scientists have identified more than one hundred cannabinoids. Most of the cannabinoids have barely been studied at this time, but a few, particularly cannabinol (CBN), seem to have potential medicinal properties. One, cannabicyclol (CBL), got a bad rap back in the 1970s because it killed two rabbits, but that’s about all the information that one can find on it.

Cannabis plants also contain terpenes and other phenolic compounds like flavonoids. Like cannabinoids, these compounds are found primarily in tiny glands that form among the buds and leaves of the plant and look like enoki mushrooms when placed under a microscope. These glands are called trichomes. Drug-type plants (marijuana) produce far more trichomes than fiber-type plants (hemp). Artificial selection by humans most likely played a major role in establishing this distinction.

While cannabinoids are thought to be unique to cannabis, terpenes and flavonoids are chemicals that are found throughout the plant kingdom. Not only do they give the plants we consume their appearance, taste, and smell; they also have potential medicinal properties. Limonene, for example, is a terpene that is found in the peels of citrus fruits, as well as cannabis. As one can surmise from the name, it has a tart scent and taste akin to lemon. It also has anti-inflammatory properties, may be useful in treating symptoms of depression and anxiety, and may inhibit the growth of tumors.

Individual terpenes also seem to impact the perceived effects of cannabis.

Isolate v. Full-Spectrum

When an individual cannabinoid or terpene is extracted from the plant, it is known as an isolate. When all the compounds found within the plant are extracted together, the resulting product is called “full-spectrum.”

Those with medical and pharmaceutical backgrounds tend to favor isolates and see them as the raw materials of cannabinoid research. They see each compound as an active ingredient that needs to be studied and tested without impurities. Understood this way, their aversion to full-spectrum concentrates makes sense. When conducting an experiment, one tries to remove as many unwanted variables as possible to show that a specific antecedent begets a specific consequent. If you’re testing 400 variables at once on individuals who may respond to each one of those variables differently, the results of the test will be an incoherent mess even in the best of circumstances.

These isolates are then formulated to accomplish specific tasks. The Canadian company Cardiol, for example, is using pure CBD in conjunction with nanotechnology to target inflammation of the heart as a way of combatting heart failure. (Note: Heart failure is not, as I thought, when the heart stops and you die, but rather when it has difficulty pumping the proper amount of blood to the rest of the body.)

The joint Israeli-Canadian venture PlantEXT, meanwhile, is using different cannabinoid formulas to develop treatments for psoriasis, IBD, and various types of chronic pain. Unlike Cardiol, PlantEXT will not focus on one cannabinoid, but will, rather, use several in their formulas, as well as some terpenes. As Doug Sommerville, the CEO of PlantEXT, told me in an interview several months ago, the combination allows them to “supercharge the effect” of just CBD.

This is a widely observed phenomenon. It is also why those who advocate for the full-spectrum approach believe that it is better to go “whole plant” rather than isolate. They say that the compounds within cannabis work best when they work together, and, in fact, that different combinations of these compounds can produce vastly different effects. This is known as the “entourage effect.”

Furthermore, advocates of full-spectrum cannabis maintain that isolates don’t work as well as full-spectrum formulas when one is attempting to alleviate certain symptoms and that certain cannabinoids can have even contrary effects when alone and when paired with other compounds naturally found within cannabis (hence the reason why different strains tend to produce such wildly different effects). For example, if you’ve heard that CBD can make you sleep better, you have heard wrong. CBD is actually a mild stimulant. However, if you take a full-spectrum dose of CBD that includes a high concentration of the terpene myrcene and the cannabinoid cannabinol (CBN), you will find yourself in the arms of Morpheus in no time. If you’re looking for relief of anxiety symptoms, studies have suggested that you probably don’t want a strain that is high in myrcene. Rather, you should look for one that contains higher levels of the terpene trans-nerolidol. Do you want to offset the psychoactive effects of THC? You’ll probably want a strain high in α-pinene—that, or you could eat a lot of pine nuts as Pliny the Elder said was the custom among the Scythians.

There are numerous other examples. The point to take away from this is that there are as many potential varieties and strains of cannabis out there as there are varieties of soup. Each one has a unique profile containing cannabinoids, terpenes, flavonoids, lignans, and so on that may produce different effects in different people. Consequently, saying that CBD is categorically good for sleep or for anxiety or virtually any disorder is like categorically saying that soup is good for weight loss.

This is, of course, false. Downing bowl after bowl of bacon cheddar soup is not going to make you lose weight. Similarly, certain strains of cannabis aren’t necessarily going to cure what ails you. There needs to be far more research into individual cannabinoids, the entourage effect, and how these chemicals interact with the body before any of these claims can be accepted as medical fact.

Unfortunately, because all cannabinoids were categorically classified as a Schedule I drug for nearly 50 years, research on these compounds was so riddled with obstacles and regulatory hurdles that most researchers simply eschewed the matter altogether. Consequently, researchers are only now beginning to experience the necessary freedom to discover how these cannabinoids interact with the body.

The Endocannabinoid System

If you’ve never heard of the endocannabinoid system, that’s not much of a surprise. It was only discovered about 30 years ago.

The endocannabinoid system operates in a fashion similar to other receptor systems within the body, such as the dopaminegeric system. The dopamingeric system is made up of receptors, which relay messages to other nerve cells, and dopamine, a neurotransmitter (or neurochemical) produced in the brain that activates these receptors. Imagine a lock and a key. The receptor is the lock. Dopamine is the key.

At its most basic level, the dopaminegeric system is responsible for motivating you to do things that the body perceives as being good for survival. When you eat or have sex, dopamine is released, the receptors go wild, and you feel really good. It’s your body’s way of rewarding you.

The endocannabinoid system functions in a similar way, but there are two receptors, known as CB1 receptors and CB2 receptors. CB1 receptors are found mostly in the central nervous system (the brain). CB2 receptors are found throughout the body and interact primarily with your immune system.

There are also two distinct neurotransmitters that interact with these receptors, anandamide (based on the Sanskrit for ananda, which means “bliss”) and 2-arachidonoylglycerol (2-AG). Both anandamide and 2-AG are produced within the body and for that reason they are called endocannabinoids to distinguish them from cannabinoids that come from plants: phytocannabinoids (though most people just call them cannabinoids for short).

Here’s where things get interesting. The endocannabinoids anandamide and AG-2 resemble the phytocannabinoid THC. In fact, they resemble THC so much that the body can’t tell the two apart. When you consume cannabis that has THC, the CB1 receptors in the brain open wide and get flooded with it, thereby bringing on the feeling of intoxication. This does not happen with high amounts of anandamide because it is a more fragile molecule that is relatively quickly broken down by fatty acid amide hydrolase (FAAH). As anyone who has been way too stoned knows, FAAH does not work on THC nearly as swiftly.

CBD is a little different, as it interacts indirectly with the body’s CB1 and CB2 receptors. In effect, it seems to kickstart the body’s endocannabinoid system, particularly as it pertains to CB2 receptors. Because the body’s CB2 receptors are mostly outside of the central nervous system, this does not cause one to feel intoxicated. Instead, CB2 receptors seem to play a role in doing things like mitigating inflammation in various parts of the body. This is the scientific reason (albeit on a basic level) why so many pharmaceutical companies and medicinal cannabis startups are interested in CBD, and why they believe that it could reduce the symptoms of autoimmune disorders like psoriasis, IBD, and even heart failure. In fact, in one of the rare mentions of cannabis from European antiquity, Dioscorides, a first century Greek doctor, mentions that (its roots, oddly) can “lessen inflammation, dissolve oedema [edema], and disperse hardened material around the joints.” What he is probably referring to is scleroderma, an autoimmune disorder.

However, this science cannot be put to its best use until we gain a better understanding of the endocannabinoid system and the way in which the phytocannabinoids interact with it. Unfortunately, this is not a simple task. Some cannabinoids seem to interact with both receptors. Some do not. THC’s prolyl homolog, tetrahydrocannabivarin (THCV), seems to block other molecules from interacting with CB1 receptors (making it what is known as an antagonist). Of course, this is only true if one takes it at a low dose. At a higher dose, THCV begins attaching itself to CB1 receptors, thereby making it what is known as an agonist. No one know why.

Once again, because the federal government has historically made it so difficult to conduct research into how the plant’s hundreds of compounds interact with other another and the body, scientists are still in the initial phases of putting all the pieces together. In fact, they are still in the process of finding all the pieces. A paper published in the Journal of Basic and Clinical Physiology and Pharmacology in 2015 suggested that a G-protein receptor with the less than memorable name of GPR55 interacts with the endocannabinoid system in such a way that it could actually be a third endocannabinoid receptor.

Land of Confusion

Scientists are not the only ones struggling to grasp the full complexity of the plant. Lawmakers are, too.

Following the passage of the most recent farm bill, each state was given the responsibility of coming up with a plan to oversee the regulation and licensing of hemp. For the 33 states that have already legalized medicinal cannabis and the ten (plus the District of Columbia) that have legalized recreational use, they have or are creating a regulatory and licensing system to oversee the production of both hemp and marijuana. Some are further along than others. Moreover, each state is unique in how it enforces its laws. The good news, though, is that regulations are actually being written, which means that business and citizens will eventually know what the law is and how to abide by it.

For the 17 remaining states, they can either draft legislation of their own or, should a state fail to do so, the USDA has said that it will create a regulatory program for them to follow.

These regulations have yet to be written.

Similarly, CBD and the dozens of potentially therapeutic cannabinoids that occur in cannabis naturally remain in a somewhat nebulous legal realm because just about all of them (if not all of them) can be extracted from both hemp and marijuana. Hemp-derived CBD is legal in most states. Marijuana-derived CBD is illegal in most states. It is unclear if the same will hold true for more obscure cannabinoids like cannabichromene (CBC), cannabigerol (CBG), and cannabidivarin (CBDV), though it seems as though they will be treated like CBD as opposed to THC.

If you find this confusing, you’re not alone.

The Attorney General of South Dakota, Jason Ravnsborg, tried to clarify the state’s position on CBD in March by issuing a proclamation. In it, he said that both industrial hemp and CBD remain illegal in South Dakota. (This does not include Epidiolex, a drug manufactured by GW Pharmaceuticals that contains cannabinoids and treats severe forms of epilepsy that was placed on a list of legal substances by Senate Bill 22 and signed into law by Governor Kristi Noem on February 19, 2019. It is the sole cannabis-derived drug to have received FDA approval as of this time.)

When one South Dakotan reached out to the attorney general’s office for clarification, he was told to direct his questions to his local state’s attorney’s office. He did so. The state’s attorney with whom he spoke told him that he wasn’t sure if he’d be able to prosecute anyone for possession of CBD until he better understood the law.

Because incidents like this are not uncommon, an entire subindustry has been created that does nothing more than play Virgil to companies and individuals needing help finding their way through the hell of thousands of pages of red tape. These are not just attorneys and compliance officers who have come out of nowhere. Many were working in the cannabis industry during the first chaotic days of legalization in places like Washington, Colorado, and California, and they learned the laws inside and out while undergoing trial by fire. Some have even consulted with legislators in jurisdictions where the laws that will regulate local industries are being drafted.

To allow them a platform to share their knowledge, yet another subindustry has been created that focuses on hosting educational and networking events for people within the cannabis industry. Whether they are held by Benzinga, REVEL, CannaGather, or CannaBrunch, the model is more or less the same as any other industry event. There are featured speakers, esteemed guests, and panelists who walk the audience through the basics of compliance, extraction, the science of the plant, running a business, and so on. Particularly for the cannabis industry, these are invaluable services. Trying to figure out just about anything by asking the internet for answers is a bad idea. For someone trying to run a cannabis business, it is a very bad idea.

The other purpose these events serve is that they create a networking ecosystem, which brings us back to Benzinga and Raznick’s insistence that attendees put themselves in uncomfortable situations. This is how doctors and experts become consultants to the owners of startups, how these owners then use the gravitas of the doctors and experts to draw in people with business experience, and how these three players working in conjunction catch the eye of those who make the whole enterprise possible: investors.

These are the four archetypes one finds at the core of most cannabis companies. You have the entrepreneur, the scientist, the suit, and the moneybags.

However, there is still the problem of attracting customers. Because advertising for cannabis brands is illegal at the federal level and still highly regulated even in states where it has been legalized, it’s difficult to get potential consumer eyeballs to notice your brand. Furthermore, due to issues with the federal tax code that will be explored in the next installment in this series, marketing is not a deductible business expense.

There is one potential solution, however, and it became apparent as the first day of Benzinga came to a close. This solution is also the final, albeit optional, ingredient to running a successful cannabis company: Getting a celebrity or influencer to serve as your brand ambassador.

First up was Calvin Johnson and Rob Sims, two former Detroit Lions who have (full disclosure) become business partners with a friend of mine from high school. They spoke about their brand, Primitive, and the benefits cannabis can offer athletes. This latter point is an issue that will likely have legs in coming years, as Johnson and Sims are not alone in criticizing professional sports leagues for demonizing cannabis while pumping players full of opioids and other drugs. Cannabis offers an alternative to opioid-based pain medications that can, and frequently do, serve as a gateway to addiction, rehab, relapse, and death for many athletes.

The other celebrity in attendance was Dan Bilzarian, an internet personality worth hundreds of millions of dollars who seems to embody the male id circa. 1988. Bilzarian was there to talk about his brand, Ignite, which is, according to a press release, “The world’s first super-premium cannabis lifestyle brand.” He shared the stage with Jim McCormick, a former executive from the tobacco industry who recently signed on as the President of Ignite, and an interviewer who could not stop salivating at the idea of talking to THE Dan Bilzarian.

There was little discussion about the science of cannabis or what will happen when they get out luxuriated by the world’s first super-ultra-mega-premium cannabis lifestyle brand. Instead, Bilzarian and McCormick served to remind everyone in attendance of one very blunt fact: Bilzarian’s social media posts, which fixate on tits, guns, cars, and the joys of having unlimited disposable income, have a reach of somewhere in the vicinity of 30 million. Whenever he mentions his brand on Instagram or Facebook or Twitter or YouTube, it means his message will come into contact with 60 million eyeballs.

Despite launching at the end of 2018, Ignite is currently valued at over $1 billion.

CANNABIS – PART II will be published in the next
issue of Stay Thirsty Magazine.


Jay Fox is a regular columnist for Stay Thirsty Magazine and is the author of The Walls (2011), one of the first novels written by a millennial.

All opinions expressed are solely those of its author and do not reflect the opinions of Stay Thirsty Media, Inc.